Since the amendment of the German wage tax guidelines in 2023 and therefore since 1 January 2023, the question arises as to how wage tax has to be calculated for employees with income which is partly taxable and partly exempt from wage tax in Germany. ...read more
Global Mobility
Medium-sized companies have been going beyond their home markets for some time now. They have long been selling and producing internationally. And where a company goes, so do its employees. So the globalization of the economy has also resulted in a globalization of employee postings.
German parent companies post employees to foreign subsidiaries to set up sales and distribution structures or production facilities. And they bring in employees from foreign establishments to work in Germany for a time. Some employees commute from one project to another around the world. Some employees work for the same employer – and some managers manage companies – in multiple foreign countries simultaneously.
Besides the in-house and personal preparations for such postings, which are already extensive, there are also many formalities that have to be addressed, such as employment contract terms on residence and immigration questions, or clarifying tax and social security obligations.
These regularly involve both the employee’s country of residence and the country to which the employee is posted. So arrangements can often be difficult, and sometimes even impossible without an advisor with the right expertise. In tax and social security matters especially, it’s important to avoid double taxation as a consequence of multiple obligations in different countries.
Both employees and companies can fall into numerous traps in posting employees abroad and in the international project business. Decisions have to be made on how to structure a foreign investment – as a foreign establishment or a subsidiary. Withholding-tax impact must be prevented or reduced as much as possible, and transfer pricing must be checked for appropriateness. Last but not least, there are value added tax risks to be attended to.
Our interdisciplinary teams in Global Mobility will clarify all questions of employment law, insurance law and taxes for you and your employees, and develop agreements with you that serve the best interests of both you as an employer and your employees. After all, a posting mustn’t fail merely because of formalities – it should bring benefits for the company and employee both.
We can resolve questions about foreign law smoothly and without red tape through our partners in the Nexia network – a platform of specialists who know one another personally and work quickly, flexibly, efficiently and practically with one another.
